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5 Ways Military Families Struggle With Money Matters

This Memorial Day, we celebrate the millions of men and women in uniform who work hard to defend the U.S. and keep us safe. But increasingly, military personnel are turning to the Consumer Financial Protection Bureau to defend themselves and their families from troubling practices among financial institutions.

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Back in March, the CFPB's Holly Petraeus, wife of Iraq-war commander David Petraeus, and her Office of Servicemember Affairs issued a report on the complaints that military personnel and their families brought against financial institutions. The report highlights more than 14,000 complaints since the CFPB started handling consumer complaints back in 2011, reflecting the extent to which military families have trouble in working with financial institutions and having their specific needs met. In particular, complaints have risen by almost 150% from 2012 to 2013, and the report highlighted several areas of greatest concern for our military personnel in handling their money matters.

1. MortgagesThe CFPB has addressed 4,700 mortgage complaints, making up about a third of its total military complaint volume. Most of those complaints deal with situations in which military personnel aren't able to make payments and therefore ask for help with loan modifications or have to deal with collection efforts and foreclosure proceedings. In particular, many financial institutions remain ignorant of programs designed specifically to help military personnel, including those who need help relocating pursuant to a permanent change of station order. With military members enjoying certain protections, the CFPB notes that financial institutions should be more aware of those protections in their dealings with military customers.

2. Debt collectionThe CFPB has taken debt-collection complaints for less than a year now, but already, it has had 3,800 complaints filed. Military personnel face a wide variety of issues on the collection front, with the most common being collection agencies trying to collect a debt that the service member doesn't actually owe. Questionable communication tactics and illegal threats from debt collectors are also frequent issues for which the CFPB received complaints. Just like their civilian counterparts, military personnel have to deal with aggressive debt collection agencies that take full advantage of how busy members of the military are, hoping that they'll just pay rather than questioning the debt and taking advantage of their rights. Some have said that debt collectors threaten to contact their commanding officers or bring their cases before a court-martial for demotion or removal of security clearance.

3. Credit cardsCredit-card complaints made up 1,700 of those that the CFPB received, with billing disputes being the most prevalent. In addition to common issues among civilian and military personnel, the CFPB noted that card companies often fail to follow the provisions of the Servicemember's Civil Relief Act, which affords special protection to members of the military during periods of deployment. As a result of these mistakes, service members often have to have errors on their credit histories remedied, causing further hassle and hardship.

4. Bank accounts and serviceAbout 1,500 military-personnel complaints relating to bank accounts and services went to the CFPB, with nearly half of all complaints relating to opening, closing, or managing accounts. In particular, the complex patchwork of fees and charges led to a huge number of complaints both in account management and in deposit and withdrawal issues, with transaction holds, overdrafts, and ongoing service fees raising concerns among many military personnel. Despite efforts to make fees more transparent, the CFPB has clearly seen ongoing difficulty among those in the military in navigating those fees and figuring out how to avoid them.

5. Other complaintsThe CFPB has recently started taking complaints in several new areas, including money transfer and payday loan services. Although relatively few complaints have come in, these are areas that affect military members especially hard, as distances between family members often require money-transfer services while the difficulty that those left behind face in dealing with personal finances makes payday loans look attractive. Military members face the threat of scams from fraudulent money-transfer entities as well as sky-high fees on payday loans that can be difficult to understand.

Need to file a complaint? Here's how.Both military and civilian personnel have the right to file financially related complaints with the CFPB. To get more information, visit the CFPB website here. By doing so, you can defend yourself and your family from financial institutions who aren't treating their customers the right way.

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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.
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